Buying a piece of land from a golf course. They suggest we show a reduced price to the land Dept. to reduce the expenses fees and duty on the land. They ask if we agree with this and if not they will reflect it as the purchasing price, about 39% more.

Since we plan to sell this land in a few years my inclination is to show the actual price and pay my half of the increased fees etc. Do not want to get shafted with taxes when we sell it. Any opinions on this?

It is normal to use the land office valuation and to split taxes , So when you come to sell you use the same method with a slightly higher value - but best to take advice from your accountant .

Thanks for the response churchill. I guess what I should have really ask is does the amount of Baht told to the land Dept when you buy have any impact on the amount of tax you pay when you sell?

Does anyone know if there is a down side to using the lessor baht figure when recording the purchase at the land office. I know that it is frequently done and is advantageous to the seller but don't really know what the effect would be to the buyer when he wants to sell.

It depends on how you agree to split the transfer costs (hence there is often benefit to both parties).

It has been agreed to split 50/50 on the transfer cost.

Thanks for the response churchill. I guess what I should have really ask is does the amount of Baht told to the land Dept when you buy have any impact on the amount of tax you pay when you sell?

As far as I am aware you cannot declare your selling price at at price less than you paid but as long as you agree with your furure buyer to use the land office valuation plus say 10% and split transfer costs that should be OK , but check with your accountant .

But , I think , If your buyer is unwilling to declare the reduced value - you will then have a problem of showing a very large capital gain .

Thanks for the response churchill. I guess what I should have really ask is does the amount of Baht told to the land Dept when you buy have any impact on the amount of tax you pay when you sell?

BEENTHEREDONETHAT,

The answer to your question is "NO". When you sell, the Land Dept. is interested in your declared selling price whether it is lower than the official price. If it is lower, then the official price shall be used to calculate the transfer fees, stamp duty or specific business tax and withholding income tax.

The withholding income tax is supposed to tax on the seller on his gain. The gain is calculated by deducting an assumed cost price, ignoring all your previous records of the price you bought and previously declared to the Land Department. This assumed cost deduction is based on a certain percentage of the selling price. The percentage is based on the number of years you have owned the property.

This answer is applicable to an individual seller only and not to a corporate seller. A corporate seller still has to pay tax on its gain based on the previous actual cost of purchase.

Irene

Thanks for the very concise answer to my question. That makes the decision easy.

In Bang Sare we gave the actual selling price & without sending an agent to look at the property & evaluate it it was accessed at 25% higher than we paid.An extra 60,000 baht ( a couple of new motor bikes ) Tried to show them the contract written by a lawyer, they wouldn't have it didn't care to see it Russian roulette. whatever they feel is right is right. I was glad for them not to ever be a judge I would have to appear before.

I would hate to try to court with the land office 25 years later.......

I guess no tea money

No ticket no laundry!

I would think if you fudged on the numbers, somehow the new owner might be able to beat you out of your agreed upon price as it would be registered lower with the land office.

At least our agreement was 50/50 so we only had to buy them 1 new motorcycle or baht for the pipe in the ground corruption fund!

My sister tells me her house deals in the U.S. They are the same snakes to deal with!